Sunday, February 24, 2013

Steve Brill's answer to U.S.'s medical bill problem? Expand Medicare

Posted By on Sun, Feb 24, 2013 at 2:18 PM

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This week's issue of Time magazine contains the single longest written article in the publication's 90-year history, a 24,000 word opus by journalist Steven Brill on how the health care industry in the U.S. is bankrupting us all - primarily by charging outrageously high hospital bills.

Brill's methodology is brilliant: He takes up the case of several citizens who have faced outrageous charges on their hospital bills (with one notable exception), breaking down those charges line-by-line, and compares those charges with what somebody would have to pay if they were on Medicare, where there are strict payment rates that hospitals can charge patients.

Perhaps the most important word that Brill introduces that most Americans surely are unfamiliar with is a hospital's "chargemaster." This is a document (previously as big as a phone book, now a massive computer file) that list's every hospital's internal price list. These are the maximum prices that hospitals list for every single procedure or item, though how they come up with such high prices isn't very clear. And many (if not most people) never are charged for those maximum prices, but it's how hospitals get away with charging such outrageous prices to the uninsured.

As we examine other bills, we’ll see that like Medicare patients, the large portion of hospital patients who have private health insurance also get discounts off the listed chargemaster figures, assuming the hospital and insurance company have negotiated to include the hospital in the insurer’s network of providers that its customers can use. The insurance discounts are not nearly as steep as the Medicare markdowns, which means that even the discounted insurance-company rates fuel profits at these officially nonprofit hospitals. Those profits are further boosted by payments from the tens of millions of patients who, like the unemployed Janice S., have no insurance or whose insurance does not apply because the patient has exceeded the coverage limits. These patients are asked to pay the chargemaster list prices.

If you are confused by the notion that those least able to pay are the ones singled out to pay the highest rates, welcome to the American medical marketplace.

Media reports on Brill's piece have focused on the incredible disparity from what a patient with (or without) private health care insurance is charged for certain items compared to what Medicare pays for them (like being charged $18 each for diabetes test strips that Amazon sells boxes of 50 for $27, or 54 cents each).

I thought I'd see Brill featured on several of the Sunday morning public affairs shows, but surprisingly he only appeared on ABC's This Week with George Stephanopolous as part of a panel discussion.

One of the major conclusions that Brill (no flaming liberal) writes about at the end of the piece is that instead of talking about raising the age of Medicare, he argues the eligibility should be dropped, and sounds like the Dennis Kucinich-wing of the Democratic Party who argued for a "Medicare-for-all" single during the debate over health care reform back in 2010.

On This Week Brill and former Obama White House adviser Steve Rattner bounced that idea around:


RATTNER: But there's a fundamental point here, Stephen, I think your piece was great. And I think you're points are right, but I also don't want people to be confused. I don't believe that we can cut our way, change the pricing, do all the things you're talking about and still save Medicare. The average person who's at Medicare retirement age has paid in some like $122,000 in the system. They'll get back $387,000 back in benefits. That's three times. You're not going to reduce that $387,000 by hospital cuts and this and that. We have to still have fundamental Medicare reforms to make those numbers work.

BRILL: Well, if you put Medicare in the context of the larger health care system, and this is something that everybody at this table is going to think that I should go to a mental hospital when I get finished saying this, the government and all of us would actually save money if you lowered — I said lowered the age for Medicare. If the Medicare age were 60 instead of 65, the economy and the taxpayers would actually save money. And George, please don't look at me like that.

RATTNER: You're potentially right. And part of the argument — you're taking people out of the Medicare age to 67 is you're taking people out of the Medicare system.

BRILL: Right. And what you would be doing, is you would be putting the most efficient player, which is Medicare — Medicare spends 80 or 90 cents to process a claim and the health insurance companies spend $18 or $20 or $25 to process a claim. Health insurance companies pay two, three, four times what Medicare pays for various services. So if you lowered the age, you would put more people into the bucket of much more efficient health care.

And the worst part about it is, the reforms that we have now, with the president's plan, are actually going to raise the costs because all of the people who are 60, or 62, or 63, who can't afford the premiums that they're going to have now, are going to be subsidized by the taxpayer.

STEPHANOPOULOS: George, well that becomes an argument for a single payer system.

No video is available of that brief discussion. However you watch a 20 minute interview Brill conducted with PBS' Charlie Rose last Thursday night by clicking here.

Brill also bashes Democrats for blocking serious medical malpractice reform, writing that"

"Republicans are right when they argue that tort reform is overdue. Eliminating the rationale or excuse for all the extra doctor exams, lab test and use of CT scans and MRIs could cut tens of billions fo dollars a year while drastically cutting what hospitals and doctors spend on malpractice insurance and pass along to patients."

As you can imagine, this is a long read, but well worth it. The overcharging of procedures in hospitals is outrageous, and it is costing this country so much. One reason why the health care reform bill has been so unpopular is not just conservatives who hate the idea of giving the government more control over 1/6 of our economy; Many liberals thought there was way too much bargaining with the health care industry, allowing them to perpetuate the current system we have (just putting more uninsured people into that system). Hopefully this story can lead to more reform.

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